Impact assessment

Tax conditionality: licensing taxi and scrap metal sectors screening equality impact assessment

Published 5 October 2023

Project objectives

The hidden economy consists of individuals and businesses with sources of taxable income that are entirely hidden from HMRC.

Some people operating in the hidden economy do so because they are unaware of or confused about their tax obligations. If they have been hiding their income for a long period, they are also likely to find it harder to come forward and tell HMRC that they are, or should have been, chargeable to tax (‘registered’).

Conditionality aims to address part of the hidden economy by helping applicants for certain public sector licences better understand their tax obligations, and by making access to the licences they need to trade, conditional on completing a tax check.

In England and Wales this applies to licences to drive taxis and private hire vehicles (PHVs), operate a private hire business, mobile scrap metal dealers and scrap metal sites.

In Northern Ireland, it will apply to licences to drive taxis. In Scotland, this will apply to licences to drive taxis and Private Hire Cars (PHCs); operate booking offices; and be a metal dealer.

Licensing bodies must obtain confirmation from HMRC that an applicant has completed a check before making a decision on the renewal application. This makes it more difficult for non-compliant traders to operate in the hidden economy.

Licensing bodies also must direct first-time applicants to guidance about their tax obligations and obtain confirmation that the applicant is aware of the guidance before considering the application.

Legislation to introduce the policy in England and Wales was included in Finance Act 2021, which received Royal Assent on 10 June 2021. Regulations containing some minor, administrative details, will be made in March 2022, to come into effect on 4 April 2022. Legislation to apply tax conditionality to licences in Scotland and Northern Ireland was included in Finance (no.2) Act 2023 which received Royal Assent on 11 July 2023.

In England and Wales, the legislation for this policy took effect from 4 April 2022. In Scotland and Northern Ireland, the legislation took effect on 2 October 2023.

This Equality Impact Assessment relates to the operational delivery of the tax policy.

Customer groups affected

This policy will affect approximately 400,000 licence holders across the UK who apply for or renew a relevant licence. It also impacts over 300 licensing bodies who administer the above licensing schemes.

Licence holders must complete a number of rigorous existing checks to obtain a licence, and this policy is a small addition to the existing regulatory process which all licence holders must undertake. This policy does not make any changes to existing requirements to notify taxable income to HMRC.

What customers will need to do

What customers need to do as a result of the change

Licensing bodies will be required to signpost first-time applicants to HMRC guidance about their tax obligations and HMRC powers and must obtain confirmation from the applicant they are aware of the content of the guidance.

Applicants and licensing bodies will be required to complete the following steps when making or dealing with a subsequent licence application (eg a renewal). Only those who have successfully completed the tax check will be provided with what licensing bodies will need to be able to consider a licence application. The tax check can be completed online via HMRC’s customer service helplines.

Applicant:

1. the licence holder prepares to make a renewal application using the forms provided by their licensing body
2. the licence holder logs into the digital service via Government Gateway (or contacts HMRC’s helplines) and completes tax check. The service will ask the applicant some simple questions about the subsequent application and their tax affairs
3. when applicant has answered the relevant questions and their statements have been checked against HMRC systems, the tax check is completed. The customer is given a tax check code
4. licence holder adds the code to their application and submits to the licensing body

Licensing body:

1. on receipt of the application the licensing body uses the code supplied by the applicant and other identifying information to get confirmation from HMRC that the tax check has been completed
2. the digital service confirms they have completed the tax check and it is still valid.
3. the licensing body considers the application and makes its decision in accordance with their current practices

How customers will access this service

Licence applicants who need to complete a tax check will access the service from gov.uk using their government gateway account or by calling a HMRC helpline.

Licensing bodies will access the service on GOV.UK.

When customers need to do this

Licence applicants and licensing bodies must fulfil the new requirements for every application for an affected licence. The majority of licences last up some 3 years, some licences list up to 5 years.

Assessing the impact

We assessed the equality impacts on all the protected characteristic groups in line with the Equality Act and Public Sector Equality Duty and section 75 of the Northern Ireland Act:

• gender reassignment
• sexual orientation
• pregnancy and maternity
• marriage and civil partnership
• people with dependents and those without
• political opinion (for Northern Ireland only)
• people who use different languages (including Welsh Language and British Sign Language)

We have not identified any published information on demographics covering Northern Ireland, Scotland and Wales, but we do have information which covers England. We have not identified any evidence that the makeup of the affected sectors could be materially different across the UK. Comments received during consultation with stakeholders have not suggested the impacts of the policy are materially different across the UK.

HMRC will provide appropriate support and guidance. All GOV.UK web content adheres to national and Internationals standards. Customers who are unable to use the online service will be able to complete the tax check over the phone with a customer service advisor. Also, our Extra Support Teams can be accessed by those customers who cannot, for whatever reason, interact with HMRC digitally or who need additional support and reassurance.

Licence holders must complete a number of rigorous existing checks to obtain a licence, and this policy is a small addition to the existing regulatory process which all licence holders must undertake. This policy does not make any changes to existing requirements to notify taxable income to HMRC.

Racial groups

Impact on customers

It is likely that a significantly higher percentage of taxi and private hire drivers are from ethnic minority groups than the general working age population. 43% of drivers in England were white according to Department for Transport’s Taxi and Private Hire Vehicle Statistics 2021 compared with 86% of the working age population of the UK according to the Labour Force Survey (A09, July to September 2021 published 16 November 2021).

Proposed mitigation

HMRC will provide appropriate support and guidance. Please see ‘People who use different languages’ for further detail on the provision of alternative languages.

Disabled

Impact on customers

It is likely that some people working in the effected sector will have disabilities.

Proposed mitigation

HMRC provides additional assistance for customers who are deaf or hearing impaired, blind or partially sighted. HMRC offers ‘Extra Support Team’(EST) services which can be accessed by those customers who cannot, for whatever reason, interact with HMRC digitally or who need additional support and reassurance. 

Digital content can also be provided in a variety of formats, including hard copy, on request. Formats available include: Braille, Audio, Large Print. There is also a zoom facility to increase and reduce font sizes within online content. All gov.uk web content, adheres to National and Internationals standards such as W3C.

Sex

Impact on customers

Taxi and private-hire drivers are more likely to be men than women, in England 93% of drivers were male in 2020 to 2021. (Department for Transport Taxi and Private Hire Vehicle Statistics 2021).

There is no evidence to suggest the operational delivery of this policy has any specific impacts on those customers within this protected characteristic group.

Age

Impact on customers

Taxi and PHV (Private Hire Vehicle) drivers on average are older than the working age population of the UK. In England over 40% of taxi and PHV drivers are aged over 50 according to the Department for Transport’s Taxi and Private Hire Vehicle Statistics, England 2020 compared to 32% of the UK labour market according to the Labour force survey (A05 SA, September to November 2021 published 18 January 2022).

There is no evidence to suggest the operational delivery of this policy has any specific impacts on those customers within this protected characteristic group; consideration has been given regarding impact on older customers, who may be more hesitant to engage digitally (although it is recognised this may not be the case for all those in the older generation population).

Proposed mitigation

HMRC will provide appropriate support and guidance. HMRC also offers ‘Extra Support Team’ services which can be accessed by those customers who cannot, for whatever reason, interact with HMRC digitally or who need additional support and reassurance.

Religion or belief

Impact on customers

Some customers may be unable to use the online service due to their religious belief.

Proposed mitigation

Customers who are unable to use the online service due to their religious belief will be able to complete the tax check over the phone with a customer service advisor. Also, our Extra Support Teams can be accessed by those customers who cannot, for whatever reason, interact with HMRC digitally.

Digital provision will offer choice to individuals in this group to self-serve outside of traditional business hours to suit their needs.

People who use different languages (Including Welsh Language and British Sign Language)

Impact on customers

Feedback from consultations and data collected by the Department for Transport highlight that English will be a second language for some users.

Proposed mitigation

Online services and guidance will be available in Welsh language.

For those customers whose first language is not English, alternative arrangements can be made for friend and family to interpret or speak on their behalf when dealing with HMRC.  Staff are aware of the available translation facilities and how to access these.

HMRC is working with organisations to co-develop support material for people who do not use English as a first language (eg British Sign Language) to explain how to communicate with HMRC using digital services.

Opportunities to promote equalities

We have considered opportunities to promote equalities and good relations between people in each of the protected characteristic groups and those outside of that group, none have been identified.

A full Equality Impact Assessment is not recommended.